-219.40(-3.03%)

Investing.com – Asian markets were mostly lower in afternoon trade on Tuesday as prospect of an escalating trade war sparked another selloff in U.S. equities overnight.

Tech shares led the decline in Asia after their U.S. peers, which derive much of their revenue from China, slumped overnight on Wall Street following news that the U.S. Treasury Department is drafting curbs to stop companies with at least 25% Chinese ownership from buying U.S. tech firms.

"Unlike the seemingly spur-of-the-moment tweets by President Trump and retaliatory exchange of tariffs, Washington's bid to protect intellectual property is an issue at the heart of a trade row between two powers battling for future global supremacy," wrote Yoshimasa Maruyama, chief market economist at SMBC Nikko Securities in Tokyo.

Chinese Vice Premier Liu He, who is also President Xi Jinping’s top economic adviser, said China and the EU had agreed to defend the multilateral trading system. Speaking at a press conference following talks on Monday in Beijing, Liu said China is prepared to face off against U.S.’s tariff threats.

“Unilateralism is on the rise and trade tensions have appeared in major economies,” Liu said. “China and the EU firmly oppose trade unilateralism and protectionism and think these actions may bring recession and turbulence to the global economy.”

The Shanghai Composite was down 0.6%, while the Shenzhen Component reversed its loss in the morning session and traded 0.4% higher by 1:35AM ET (05:35 GMT). Hong Kong’s Hang Seng Index was down 0.1%.

"There's no plans to impose investment restrictions on any countries that are interfering in any way with our country. This is not the plan," he said, adding that the markets were overreacting to recent reports that the administration would restrict foreign investment.

Treasury Secretary Steven Mnuchin, who has pressed within the administration for a negotiated settlement to trade disputes with China, denied the measures would be aimed specifically at China.

The restriction is “not specific to China, but to all countries that are trying to steal our technology,” he said in a tweet on Monday.